Can tourism curb income inequality?: Tourism Agenda 2030

PurposeThis paper aims to examine the relationship between tourism development and income inequality, closely linked to the Sustainable Development Goals, for the case of a large sample of 83 countries (and subsamples) over the period 1990-2019. Design/methodology/approachThis study uses rigorous dynamic panel data analysis, namely, a Panel Vector Autoregressive Error Correction model, which takes into account both dynamic and endogenous relationships in the tourism-inequality nexus. FindingsThe results provide strong support that tourism development has an income inequality reducing effect (albeit relatively small with a reported elasticity of 0.05). Subsamples analysis reveals that the impact of tourism on income inequality varies and is relatively larger in developing economies and those tourist-dependent economies, as compared to developed economies. In fact, it is reported that a 1% increase in tourism development reduces income inequality by 0.46% for developing and 0.56% for tourist-dependent economies as compared to only 0.02% in developed economies. It is further observed that tourism may affect income inequality indirectly via economic growth. Originality/valueThis paper attempts to supplement the dearth literature on the tourism-inequality nexus by analyzing subsamples from a large data set while also using a dynamic panel data framework. The potential indirect effect of tourism on inequality via the economic growth channel is also explored.